Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.1 Page 1 of 55 AO 106 (Rev. 04110) Application for a Search Warrant UNITED STATES DISTRICT CciuR~ MAY 14 2019 for the Southern District of California In the Matter of the Search of (Briefly describe the property to be searched or identify the person by name and address) One iPhone 6, white in black case, with serial number DNPQ94MCGRYH, currently located at 10385 Vista Sorrento Parkway, San Diego, CA 92121 ) ) ) ) ) ) 19MJ1985 Case No. APPLICATION FOR A SEARCH WARRANT I, a federal law enforcement officer or an attorney for the government, request a search warrant and state under pena.lty of perjury that I have reason to believe that on the following person or property (identify the person or describe the property to be searched and give its location): See Attachment A located in the Southern ~------~ District of California , there is now concealed (identify the ~----------~ person or describe the property to be seized): See Attachment B The basis for the search under Fed. R. Crim. P. 4l(c) is (check one or more): Mevidence of a crime; 0 contraband, fruits of crime, or other items illegally possessed; ~property designed for use, intended for use, or used in committing a crime; 0 a person to be arrested or a person who is unlawfully restrained. The search is related to a violation of: Code Section 18 USC§ 371 15 U.S.C. § § 78j(b ), 78ff, and 17 C.F.R. § 240.10b-5 Offense Description Conspiracy Securities Fraud The application is based on these facts: See Attached Affidavit ii Continued on the attached sheet. 0 Delayed notice of _ _ days (give exact ending date if more than 30 days: _ _ _ _ _ ) is requested under 18 U.S.C. § 3103a, the basis of which is s-e~t,.._fo-nrt~CZ£h~~th_e_1 aa-~tt.Fk-ch_.,e.___sh_e_e_t._ _ _ _ _ _ _ _ _ __ ~ Applicant's signature FBI SA Stephanie Schuld Printed name and title Sworn to before me and signed in my presence. Date: City and state: San Diego, California U.S. Magistrate Judge Michael S. Berg Printed name and title Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.2 Page 2 of 55 1 AFFIDAVIT 2 I, Stephanie Schuld, being duly sworn, state as follows: 3 4 5 INTRODUCTION A. 1. 6 7 Purpose of This Affidavit I make this affidavit in support of an application for a second follow-on search warrant (the "Second Follow-On Warrant") to seize additional items found on a 8 cellular telephone belonging to Oliver Lindsay - an iPhone 6, white in black case, with 9 serial number DNPQ94MCGRYH (the "Subject Telephone") - pursuant to a search 10 warrant issued by the Honorable Barbara L. Major on December 14, 2018 in 18-mj-6297 11 (the "Prior Warrant") and an initial follow-on search warrant issued by the Honorable 12 Linda Lopez on March 6, 2019 in 19-mj-0964 (the "Initial Follow-On Warrant", and 13 together with the Prior Warrant, the "Prior Warrants"). This affidavit incorporates by 14 reference the affidavits in support of the Prior Warrants, which are attached as Exhibits A 15 andB. 16 17 18 19 20 21 22 23 2. On June 29, 2018, a grand jury sitting in the Southern District of California handed down an indictment against defendants Oliver Lindsay and Gannon Giguiere. The indictment alleges, inter alia, that Lindsay and Giguiere conspired to commit securities fraud, and committed securities fraud, in connection with the stock of Kelvin Medical, Inc., and that Giguiere previously did the same in connection with the stock of Eco Science Solutions, Inc. A superseding indictment, handed down on January 25, 2019, added manipulative trading in Kelvin Medical stock as an object of the conspiracy. 3. 24 Lindsay and Giguiere were arrested on July 5, 2018. They were both carrying 25 cell phones, which were seized. 1 The Subject Telephone is one of the cell phones seized 26 from Lindsay. Agents are reviewing exported data from the Subject Telephone to identify 27 28 1 Defendant Giguiere's cell phone was searched pursuant to a separate search warrant, but agents were unable to access the content of the data on that phone. 1 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.3 Page 3 of 55 1 2 3 materials which are subject to seizure pursuant to the Prior Warrants. More specifically, the Prior Warrant authorizes a search for evidence surrounding the Kelvin Medical market manipulation scheme, and the Initial Follow-On Warrant authorizes a search for evidence 4 5 6 7 8 surrounding insider trading in a separate company, Long Island Iced Tea Corp. (ticker symbol: LTEA) The Initial Follow-On Warrant allows the seizure of items from November 1, 2017 to July 5, 2018. The purpose of this Second Follow-On Warrant is to expand this timeframe to include communications dating back to September 1, 201 7. 4. 9 Based on the information below, I submit that there is probable cause to 10 believe that additional information from the Subject Telephone, not currently subject to 11 seizure under the Prior Warrant, will contain evidence of the following crimes: conspiracy 12 to commit securities fraud, in violation of 18 U.S.C. § 371; and securities fraud, in 13 violation of 15 U.S.C. §§ 78j(b), 78(ff), and Title 17 C.F.R., § 240.lOb-5; as more fully 14 identified in Attachment B. 15 16 17 18 19 5. All the conclusions and beliefs set forth in this affidavit are based on my training and experience, conversations with other agents who have extensive experience in securities fraud investigations, and my knowledge of the facts of this investigation. All of the dates, times, and amounts listed in this affidavit are approximate. This affidavit sets forth only the facts necessary to support the issuance of the requested search warrant; it 20 21 22 23 does not include each and every fact known to me concerning this investigation. B. Training and Experience 6. I have been employed as a Special Agent with the Federal Bureau of 24 Investigation ("FBI") since January 2010. I am currently assigned to the San Diego 25 Division's financial crimes squad. Prior to working financial fraud cases, I spent more 26 than four years investigating public corruption. 27 28 7. Before I joined the FBI, I received a Bachelor of Arts degree in business with an emphasis in accounting and finance from Bethel University. Following graduation, I 2 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.4 Page 4 of 55 1 2 3 was employed by a publicly-held Fortune 500 company as a Staff Accountant, Division Accounting Manager, and lastly, a Controller. While at this company I gained more than five years of experience compiling and analyzing financial information. 4 8. 5 6 7 8 As a Special Agent, I received basic federal law enforcement training at the FBI Academy in Quantico, Virginia. My training at the FBI Academy included instruction in how to conduct searches in accordance with the Fourth Amendment, the drafting of search warrant affidavits, and the probable cause standard. 9. 9 During my career as an FBI Agent, I have investigated various white collar 10 crimes, including mail fraud, wire fraud, embezzlement, bribery, money laundering, 11 public corruption, and conspiracy to commit these offenses. PROBABLE CAUSE 12 13 c. Pump and Dump I Market Manipulation of Kelvin Medical Stock; Insider 14 Trading in Long Island Iced Tea Corp. 15 10. 16 17 18 19 20 21 22 23 As outlined in Exhibit A, there is probable cause to believe that defendants Lindsay and Giguiere were part of a conspiracy to commit securities fraud by engaging in a pump-and-dump and market manipulation scheme in connection with Kelvin Medical stock, and that Giguiere previously did so in Eco Science Solutions stock. Those schemes are the subject of allegations in the indictment and superseding indictment in US. v. Giguiere, et al., 18CR3071-WQH. 11. As outlined in Exhibit B, there is probable cause to believe that defendants Lindsay and Giguiere were part of a conspiracy to commit securities fraud by engaging in 24 insider trading in the stock of LTEA, including by conspiring to trade stock in this 25 company, on the basis of confidential, insider information. This includes trades made in 26 advance of a December 21, 2017, LTEA press release (the "Blockchain Press Release") 27 entitled "Long Island Iced Tea Corp. to Rebrand as 'Long Blockchain Corp.': Corporate 28 Focus to Shift Towards Opportunities Strategic to Blockchain technology." 3 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.5 Page 5 of 55 1 2 3 12. The Prior Warrants also set forth facts giving rise to probable cause to believe that evidence of these crimes would be found in the Subject Telephone. Both of the Prior Warrants rely, in part, on information provided by CHS. 2 4 5 D. 13. 6 7 8 Review of the Subject Telephone Pursuant to the Prior Warrants Since extracting data from the Subject Telephone, agents have been rev1ewmg its contents in an effort to identify and seize the evidence described in Attachments B to the Prior Warrants. 14. During their review of these communications, agents identified several 9 1o encrypted text messages in which Lindsay and other individuals discuss what appears to 11 be confidential information regarding L TEA. 12 15. Many of the messages within these text strings were sent from November 1, 13 2017 to July 5, 2018, and therefore may be seized pursuant to the Initial Follow-On 14 Warrant. However, some of the messages in these text strings were sent before November, 15 1, 2017. 16 Example 1 17 18 16. For example, a WhatsApp text string between Lindsay and a user identified on Lindsay's phone as "Eric W", who I believe is Eric Watson3 based on the other 19 20 In August 201 7, the United States charged CHS in a sealed complaint with conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, for his role in a scheme relating to the 2012 manipulation Cuba Beverage Company. When approached by agents, CHS agreed to cooperate, the arrest warrant was not executed, and the complaint was later dismissed without prejudice. CHS has entered into a cooperation agreement with the United States, has been advised that he will be charged for his role in the prior scheme at the conclusion of the investigation, and is cooperating in hopes that the United States will file a motion for downward departure under 18 U.S.C. § 3553 and/or§ 5Kl .1 of the Sentencing Guidelines. 2 21 22 23 24 25 26 27 28 3 As described in the Initial Follow-On Warrant, Eric Watson was a significant shareholder in L TEA in late 2017. A Form S-1 filed by LTEA with the Securities and Exchange Commission stated that Watson owned 1,502,821 LTEA shares, which 4 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.6 Page 6 of 55 1 2 3 evidence in this case, began on September 11, 2017, and continued until December 18, 2017. This text string contains a continuing discussion of information concerning "tea," "blockchain," and "LTEA," all of which I believe to refer to Long Island Iced Tea Corp. 4 17. On September 19, 2019, Watson texted Lindsay: "We seem to have a hold 5 6 7 8 up with tea? Paul saying you need more time? We really should [sic] moving don't you think?" Lindsay responds, including by stating: "No real delay form me ... Needed all the structure info . . . Got that ... " 18. On September 20, 2019, Lindsay texted Watson: "Rod can't reach paul to 9 10 nail down IR contact ... Need that asap." Watson responded: "Tell him to talk to Julian 11 asap. Paul out of action." 12 19. On September 21, 2017, Watson and Lindsay exchanged the following texts: 13 Watson: "Let's get going." 14 Lindsay: "Convince Julian." 15 Watson: "That won't be a problem. We will first need to close the 16 capital raise tomorrow. When Tom confirms his involvement we will 17 18 19 close." 20. On November 3, 2017, Watson sent the following text message, which based on my training and experience and other evidence obtained in this case, I believe refers to 20 21 22 23 common aspects of a pump-and-dump campaign - specifically, the "pump," which often includes the coordinated use promotions, calls rooms, and corporate news releases surrounding L TEA. 24 25 26 27 28 represented a 15.1 % beneficial ownership in the company, on or about November 20, 2017. 5 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.7 Page 7 of 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 21. The text string continues through December 18, 2019, and includes detailed 16 discussions of the expected timing and content of the Blockchain press release, which 17 LTEA distributed on December 21, 2019. 18 19 20 21 22. Based on my training and experience, and other evidence gathered in this case, the portion of this text string that was exchanged before November 1, 2017, provides substantial context surrounding the LTEA insider trading conspiracy, and identifies other possible conspirators. 22 Example 2 23 24 25 26 27 28 23. As another example, a WhatsApp text string between Lindsay and a user identified on Lindsay's phone as "Julian Davidson" began on September 22, 2017 and continued until November 10, 2017. 24. This text string contains a continuing discussion of information concerning a promotional campaign - often referred to as an "investor relations," or "IR," program - 6 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.8 Page 8 of 55 1 2 3 and funding that Lindsay was expected to, and apparently did, provide in connection with LTEA. 25. On September 26, 201 7, Davidson texted Lindsay: "I want to get started on 4 5 6 7 8 9 the IR program but I don't have the charges aligned to the contract yet." 26. On October 2, 2017, Davidson texted Lindsay: "Hi Ollie -I'm getting a little nervous - and will need to delay the close again - any progress on your end? Cheers Julian." 27. On October 3, 2017, Lindsay texted Davidson documentation of a $681,625 10 wire transfer from Weiser AM to Long Island Brand Beverages. Based on other evidence 11 in this case, I believe that "Weiser AM" refers to Weiser Asset Management, an entity 12 with which Lindsay worked and for which Lindsay engaged in securities trading activity 13 during 2017 and 2018. 14 28. Based on my training and experience, and other evidence gathered in this 15 case, the portion of this text string that was exchanged before November 1, 2017, provides 16 substantial context surrounding the L TEA insider trading conspiracy, supports an 17 18 inference that Lindsay invested in LTEA before the Blockchain press release, and identifies other possible conspirators. 19 Example 3 20 21 22 23 24 29. As a final example, a WhatsApp text string between Lindsay and a user identified on Lindsay's phone as "The R." began on September 15, 2017 and continued until December 22, 2017. Within the text string, Lindsay refers to The R. as "Rodney." 30. On September 20, 2017, Lindsaytexted The R. a contact file with information 25 surrounding "Julian Davidson." The file listed Davidson as the Executive Chairman of 26 L TEA. Lindsay also stated: "Call him re LT ... Asap." The R. responded: "Ok ... Call 27 me ... Julian wants to know: How we know what our funds have been applied to. How 28 we measure success." 7 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.9 Page 9 of 55 1 2 3 31. On September 22, 2017, Lindsay texted The R.: "Analytics on the L TEA investor portal will reveal activity ... Chadwick will provide a monthly report of number of impressions our efforts are achieving." Based on other evidence gathered during this 4 5 6 7 8 9 case, I believe the reference to "Chadwick" concerns an entity known as Chedwick Marketing, a firm that was involved in funding promotional activities (the "pump") for stocks during 201 7 and 2018, and the reference to "impressions" refers to the number of people who were exposed to the promotional efforts (e.g., the number of visits to a given promotional website, and the number of individuals contacted by phone rooms). 32. 10 On September 28, 2017, Lindsay texted The R.: "Why is Gannon losing his 11 shit? ... Can you communicate with him." I believe "Gannon" refers to Giguiere based 12 on other evidence gathered in this case, including the fact that Lindsay and Giguiere 13 discussed via telephone calls and text messages payments to and from "Rodney" at 14 "Chedwick." 15 16 17 18 19 20 21 22 23 24 25 33. The pre-November 1, 2017 messages described above provide important context for messages about LTEA that were sent between November 1, 2017 and July 5, 2018. 34. The timing of the communications described above give rise to probable cause to believe that the conspiracy to commit insider trading in L TEA stock began at least as early as September 1, 2017. 35. For these reasons, this second follow-on application is being submitted to allow the seizure of evidence of this crime dating back to September 1, 2017. CONCLUSION 36. Based on the foregoing, there is probable cause to believe that Giguiere and 26 Lindsay conspired with each other and others to, and did, trade L TEA securities on the 27 basis of material, non-public information, in violation of 18 U.S.C. § 371, 15 U.S.C. 28 §§ 78j(b), 78(ff), and Title 17 C.F.R., § 240.lOb-5. Further there is probable cause to 8 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.10 Page 10 of 55 1 2 believe that the items to be seized in Attachment B will be found on the Subject Telephone as described in Attachment A. 3 Respectfully submitted, 4 fkeject 9 Telephone") - pi.irsuant to a search warrant issued by the Honorable Barbara L. Major on 10 December 14, 2018 in 18-mj-6297 (the "Priot Warrant"). This affidavit incorporates by reference the affidavit in support of the Prior Warrant, which is attached as Exhibit A. 11 2. 12 On June 29, 2018, a grand jury sitting in the Southern District of California 13 handed down an indictment against defendants Oliver Lindsay and Gannon Giguiere. The 14 indictment alleges, inter alia, that Lindsay and Giguiere conspired to commit securities 15 fraud, and committed securities fraud, in connection with the stock of Kelvin Medical, 16 Inc. A superseding· indictment, handed down on January 25, 2019, ad5fed manipulative 17 trading in Kelvin Medical stock as an object of the conspiracy. 18 19 20 21 22 3. ' Lindsay and Giguiere were arrested on July 5, 2018. They were both carrying cell phones, which were seized. 1 The Subject Telephone is one of the cell phones seized from Lindsay. Agents are reviewing· exported data from the Subject Telephone to identify materials which are subject to seizure pursuant to the Prior Warrant. 4. 23 Based on the information below, I submit that there is probable cause to 24 25 believe that additional information from the Subject Telephone, not currently subject to 26 to commit securities fraud, in violation of 18 U.S.C. § 371; and securities fraud (insider seizure under the Prior Warrant, will contain evidence of the following crimes: conspiracy 27 28 Defendant Giguiere 's cell phone was searched pursuant to a separate search warrant, but agents were unable to access the content of the data on that phone. I 1 I I l I Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.42 Page 42 of 55 1 2 trading), in violation of 15 U.S.C. §§ 78j(b), 78(ff), and Title 17 C.F.R., § 240.lOb-5; as more fully identified in Attachment B. 3 4 5 5. All the conclusions and beliefs set forth in this affidavit are based on my training and experience, conversations with other agents who have extensive experience in securities fraud investigations, and my knowledge of the facts of this investigation. All 6 7 8 9 . of the dates, times, and amounts listed in this affidavit are approximate. This affidavit sets forth only the facts necessary to support the issu~nce of the requested search warrant; it does not include each and every fact known to me concerning this investigation. 1o B. Training and Experience 11 6. I have been employed as a Special Agent with the Federal Bureau of 12 Investigation ("FBI") since January 2010. I am currently assigned to the San Diego 13 Division's financial crimes squad. Prior to working financial fraud cases, I spent more 14 than four years investigating public corruption. 15 7. Before I joined the FBI, I received a Bachelor of Arts degree in business with 16 an en;i.phasis in accounting and finance from Bethel University. Following graduation, I 17 was employed by a publicly-held Fortune 500 company as a Staff Accountant, Division 18 Accounting Manager, and lastly, a Controller. While at this company I gained more than 19 20 21 22 23 five years of experience compiling and analyzing financial information. 8. As a Special Agent, I received basic federal law enforcement training at the FBI Academy in Quantico, Virginia. My training at the FBI Academy included instruction in how to conduct searches in accordance with the Fourth Amendment, the drafting of search warrant affidavits, and the probable cause standard. 24 2 5 26 crimes, including mail fraud, wire fraud, embezzlement, bribery, money launderirig, 27 public corruption, and conspiracy to commit these offenses. 9. During my career as an FBI Agent, I have l.nvestigated various white collar !! 28 2 I I Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.43 Page 43 of 55 1 2 PROBABLE CAUSE c. 3 4 5 6 7 Pump and Dump I Market Manipulation of Kelvin Medical Stock 10. As outlined in Exhibit A, there is probable cause to believe that defendants Lindsay and Giguiere were part of a conspiracy to commit securities fraud by engaging in a pump-and-dump· and market manipulation scheme in connection with Kelvin Medical stock. That scheme is the subject of allegations in the indictment and superseding 8 indictment in U.S. v. Giguiere, et al., 18CR307 l -WQH. Relevant Individuals and Entities 9 D. 10 11. Oliver Lindsay - According to U.S. law enforcement databases, Lindsay is a 11 Canadian citizen. 12 Lindsay primarily resides in Georgetown, Cayman Islands. Based on Lindsay's statements 13 during recorded phone calls, Lindsay operated an offshore brokerage firm known as 14 CMGT Capital Management ("CMGT'). According to documents obtained from FINRA, 15 the securities regulator, CMGT, Inc., was an affiliate of CMGT. Based on the evidence 16 gathered in this case, much of which is discussed below, I believe Lindsay was involved, 17 18 along with Giguiere and others, in illegal insider trading in the stock of Long Island Iced Tea Corp. (ticker: LTEA). 19 12. 20 21 22 23 24 Gannon Giguiere - Based on his recorded statements, a review of the website itself, and according to CHS, Giguiere has operated a stock promotion website called TheMoneyStreet.com since at least as early as 2016. Based on the evidence gathered in this case, some of which is discussed below, I believe Giguiere was involved, along with Lindsay and others, in illegal insider trading in LTEA stock. 13. 25 26 According to Lindsay's statements during recorded phone calls, CHS - CHS2 has admitted to investigators that he has been involved in penny stock fraud for many years, and has had contact with many other repeat players in the 27 28 2 In August 2017, the United States charged CHS in a sealed complaint with conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, for his role in a scheme I I I I 3 I .. 1 2 3 4 5 6 7 8 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.44 Page 44 of 55 industry. CHS states that, since at least as early as 2016, he was involved in the promotion of stocks through TheMoneyStreet.com. CHS and his associate, Giguiere, paid for advertisements on websites like Yahoo Finance, where a click on the ad links to a TheMoneyStreet.com landing page touting a particular stock. CHS is cooperating with the investigation, and has recorded conversations and captured evidence of written communications with Giguiere, Lindsay, and others regarding the manipulation of many stocks. 14. · Long 'island Iced Tea Corp. - A Form S-1 registration statement (the "LTEA 9 10 Form S-1 ")submitted by LTEA to the Securities and Exchange Commission (SEC) on 11 November 22, 2017 stated that the company was "engaged in the production and· 12 distribution of premium Non:-Alcoholic Ready-to-Drink ('NARTD') beverages. We are 13 currently organized around our flagship tea product under the brand Long Island Iced 14 Tea®." LTEA's stock was publicly traded on the Nasdaq Capital Market. On December 15 21, 2017, the company disseminated a press release entitled."Long Island Iced Tea Corp. 16 to Rebrand as 'Long Blockchain Corp.': Corporate Focus to Shift Towards Opportunities 17 18 19 20 21 22 23 Strategic to Blockchain technology." LTEA's stock price increased significantly based on this press release. The company also changed its ticker symbol from LTEA to LBCC. 15. Eric Watson - According to the LTEA Form S-1, Eric Watson was a significant shareholder in LTEA in late 2017. The LTEA Form S-1 stated that Watson owned 1,502,821 LTEA shares, which represented a 15 .1 % beneficial ownership in the company, on or about November 20, 2017. 24 relating to the 2012 manipulation Cuba Beverage Company. When approached by agents, CHS agreed to cooperate, the arrest warrant was not executed, and the complaint 26 was later dismissed without prejudice.· CHS has entered into a cooperation agreement with the United States, has been advised that he will be charged for his role .in the prior 27 scheme at the conclusion of the investigation, and is cooperating in hopes that the United 28 States will file a motion fo.r downward departure under 18 U.S. C. § 3553 and/or '§ 5Kl .1 of the Sentencing Guidelines. 25 I } 4 I ! .. Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.45 Page 45 of 55 1 E. 2 3 CHS's Communications with Defendants Lindsay and Giguiere 16. Communications recorded by CHS reveal that Giguiere and Lindsay discussed an overall plan, and the day-to-day execution, surrounding their scheme to 4 5 6 7 8 manipulate the stock of Kelvin Medical, and to promote Kelvin Medical stock on TheMoneyStreet.com. These communications took place from at least as early November 2017 through on or about July 5, 2018. F. Review of the Subject Telephone Pursuant to the Prior Warrant 17. .Since extracting data from the Subject Telephone, agents have been 9 1o reviewing its contents in an effort to identify and seize the evidence described in 11 Attachment B to the Prior Warrant. This review includes com1nunications by, between or 12 among Lindsay, Giguiere, and/or CHS. 13 18. During their review of these commun~cations, agents identified several text 14 15 messages conveymg information regarding promotional efforts, including on 16 17 18 19 20 21 22 23 TheMoneyStreet.com. Specifically, when agents searched the Subject Phone for records containing the term "TheMoneyStreet," the review platform they were utilizing dispiayed a text message "conversation" between Lindsay and Watson. The conversation included encrypted text messages that were exchanged between September 19, 2017 and December 23, 2017. Many of the text messages conveyed information directly relevant to efforts to I I promote stocks (e.g., upcoining corporate announcements), and one text message in the conversation specifically linked to a TheMoneyStreet.com page. Because the topics and the timeframe of the conversation fell within the scope of the. Prior Warrant, agents 24 25 reviewed the conversation in detail. 26 Watson (referred to herein as the "LTEA Plain View Materials") concerned 27 TheMoneyStreet' s promotion of L TEA, and draft press releases regarding a change in 28 LTEA 's business focus and strategic plan. One such draft LTEA press release stated that 19. Among other things, the record of the. conversation between Lindsay and 5 I .. 1 2 3 4 5 6 7 8 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.46 Page 46 of 55 "[t]he primary focus of the Company will now be the exploration of and investment into opportunities that leverage the benefits of blockchain technology. The Company will continue to operate its subsidiary, Long Island Brand Beverages, LLC, as a beverage business focused on the ready-to-drink segment of the beverage in~ustry." 20. As set forth in greater detail below, the timing of the communications found in the LTEA Plain View Materials fit into a chronology that gives rise to probable cause to believe that defendants Lindsay and Giguiere engaged in a conspiracy to commit insider 9 trading, and committed insider trading, in LTEA stock. 10 G. Information Regarding Long Island Ice Tea Corp. 11 21. According to documents that the SEC obtained from L TEA through an 12 administrative subpoena, LTEA had in place an insider trading policy that forbade insiders 13 from using material, non-publ~c information about the company to trade its stock, or to 14 15 share such information with others for the purpose of trading its stock. 16 17 18 19 20 21 22 23 22. promoted Based on a review of the contents of TheMoneyStreet.com, the website the stock of LTEA m November 2017 under the URL http://www.themoneystreet.com/read-the-tea-leaves-time-to-go-long-in-the-ready-todrink-market/ (the "LTEA Promotion"). Based on my training and experience, I know that the term "going long" often means engaging in a transaction that will increase in value if the subject industry or company experiences success (or is perceived as successful by market participants). 23. The LTEA Plain View Materials contain a November 14, 2017 text message 24 from Watson to Lindsay. The text message attached a document entitled "Stater: Cryp~o 25 IM Draft.pptx." The cover page of this document reveals that the document concerns 26 "Stater Global Markets[:] Equity Investment Deck - Nov 2017.'' The remainder of the 27 document discusses Stater Global Market's purported focus, background, and the "Crypto 28 Currency Market Opportunity." The LTEA Plain View Materials further contain a text 6 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.47 Page 47 of 55 1 2 3 ·4 5 6 7 8 message on November 16, 2017, that also attaches a document entitled "Stater: Crypto IM Draft.pptx," which appears to be a revision of the document that Watson sent to Lindsay on November 14, 2017. 24. On December 4, 2017, CHS recorded a call with Lindsay. On that call, Lindsay described his discussions with others regarding L TEA. Specifically, Lindsay stated to CHS: ''The guy behind the deal, Eric, was trying to get _me to find a Canadian vehicle to vend in a currency trader out of the U.K. called Stater ... Stater.com, or 9 something like that. ... He thinks that he's got approval from a majority of the shareholders 1o to vend in to LTEA as a blockchain deal and, like, add this like blockchain element to an 11 existing currency trader. So it could be a massive press release, actually." Lindsay also 12 stated on the call that "Gannon [Giguiere] should try to conserve as much of that budget 13 as possible without burning his,. uh, his, his relationships. Because we're going to need it 14 when comes-I mean, it will be good to have it when we come out." Lindsay also stated 15 16 to CHS: "When Eric is going around to ... shareholders, he's revealing a little bit to them. 17 18 19 20 21 22 23 I f He's telling.them that they're now [sic] inside information, they can't transact the stock, t tI but there's gonna be .some leakage· there. Like, there's going to be some people that are going to start bidding the stock up." Lindsay also stated: "He thinks he can announce an LOI early next week." Based on my training and experience, and my knowledge of the I f I investigation, I believe the term "vend in" refers to a merger of a public company (with stock that trades in the securities markets) and a private company; the term ''budget" refers to money that has been or will be spent on TheMoneyStreet.com's promotion of LTEA 24 and its stock; and the term "LOI" refers to a letter ofintent surrounding a potential merger 25 of LTEA with a block chain company. 26 I 25. On December 7, 2017, Giguiere sent an email to Lindsay, CHS, and a third 27 party stating "Can you please proton me the deck and all supporting information around 28 the Crypto transaction in LTEA?" Later the same day, Lindsay sent to Giguiere and CHS_ 7 II I I Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.48 Page 48 of 55 ·, 1 I I I an email attaching a document entitled "Crypto IM Draft.pptx." This document appears 2 to be the same as the one that Lindsay received via text message from Watson on 3 I November 16, 2017. 4 26. 5 According to communications found in the L TEA Plain View Materials, defendant Lindsay sent an encypted text message to Watson with a link to the LTEA 6 I promotion on TheMoneyStreet.com on November 16, 2017. 7 27. 8 According to communications found in the LTEA Plain View Materials, on December 9, 2017, Lindsay sent an encrypted text message to Watson. The message 9 . 10 forwarded what appears to be a message Lindsay had received from a third party. Lindsay 11 also stated the following: "Getting really embarrassing to receives [sic] notes like this from .. 12 clients, especially when it's happened days ago and I sound like I haven't a clue. Asking 13 wtf I've gotten them in to. [... ] This things getting cornered into a toxic spiral. Chance 14 15 of an LOI saving it ... slim. Some other magic ace going to save it!?" 28. I II According to communications found in the LTEA Plain View Materials, on 16 December 19, 2017, at 3:58 P.M.,3 Watson sent defendant Lindsay an encrypted text 17 message attaching a document entitled "LIIT Press Release_Block Chain_v2.docx." This 18 document concerned transitioning the company to focus on block chain technology. 19 29. 20 21 22 23 24 According to communications found in the ~TEA Plain'View Materials, on December 19, 2017, at 7:57 P.M., Watson sent Lindsay an encrypted text message attaching a document entitled "LIIT Press Release_Block Chain_v4 clean.docx." This version of the press release also concerned transitioning the company to focus on block chain technology. 30. 25 According to communications found in the LTEA Plain View Materials, on 26 December 20, 2017, at 4:02 A.M., Watson sent defendant Lindsay an encrypted text 27 message attaching a document entitled "LIIT Press Release Block Chain v5 sw 28 3 Pacific Time is used herein, unless otherwise noted. I I 8 } I t Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.49 Page 49 of 55 1 clean.docx." This version of the press release also concerned transitioning the company 2 to focus on block chain technology. 3 31. 4 Lindsay sent a text message attaching a document entitled "LIIT · Press Release_Block Chain_v5 sw clean.docx" to Giguiere and CHS on December 20, 2017 at 5 4:53 A.M. Between 5:37 A.M. and 6:11 A.M., Giguiere, Lindsay and CHS exchanged 6 the following encrypted text messages: 7 8 Giguiere: *interesting 9 ... 10 Giguiere: This release drops today, correct? 11 Lindsay: Should be now ... or post market 12 13 Lindsay: I guess we will know shortly 14 Giguiere: Yes 15 32. 16 17 18 19 20 21 22 According to FINRA, it conducted an investigation of possible insider trading in LTEA in and around December 2017. During its investigation, FINRA staff members obtained brokerage account documentation from LTEA's stock transfer agent, Continental Stock Trans~er. This documentation shows that CMGT, Inc., acquired 332,500 LTEA shares in connection with an offering of shares by LTEA on November 16, 2017 (i.e., CMGT Inc. did Iiot purchase these shares in the market - rather, CMGT, I Inc., received the shares _from L TEA itself). 4 23 24 25 FINRA staff members also obtained account documentation from State Street Bank. 26 According to FINRA, this documentation shows that CMGT, Inc., purchased 1,673 27 LTEA shares, and sold 2,000 LTEA shares on November 28, 2017; sold 12,000 LTEA . shares on December21, 2017, and purchased 9,800 LTEA shares between December 22 28 and December 26, 2017. FINRA calculated realized·profits on these transactions of$40. 4 I II I 9 I I f' Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.50 Page 50 of 55 1 2 33. During its investigation, FINRA staff members obtained account statements and trade blotters for brokerage accounts held in the name of "Gannon K Giguiere," and 3 · activity in these accounts on December 20, 2017: 5 (a) At or about 8:49 A.M., a brokerage account in the name of Gannon K 6 Giguiere (the "Gannon Giguiere Brokerage Account"), held at 7 Robinhood Financial LLC, purchased 17,500 shares of LTEA for 8 approximately $42,350, for an average cost of $2.42 per share. 5 9 (b) 10 Between at or about 8:54 A.M. and 9:37 A.M., a brokerage account in 11 the name of Lindsay Giguiere (the "Lindsay Giguiere Brokerage 12 Account"), held at Scottrade, Inc., purchased 17,500 shares of LTEA 13 for approximately $42,350, for an average price of $2.42 per share. 6 14 34. The market for LTEA stock closed at $2.44 per share on December 20, 2017. 15 35. According to a chronology of events that LTEA submitted to FINRA for 16 purposes of the referenced FINRA examination, at 5:32 A.M. on December 21, 2017, 17 L TEA disseminated a press release (the "Blockchain Press Release") entitled ''Long Island 18 Iced Tea Corp. to Rebrand as 'Long Blockchain Corp.': Corporate Focus to Shift Towards 19 Opportunities Strategic to Blockchain technology." 20 36. At 5:43 A.M. on December 21, 2017, Lindsay sent a text message to Giguiere 21 22 and CHS stating "LT $11 On News." 23 24 25 26 27 28 According to FINRA, the Robinhood Financial account statements gathered by FINRA also show that this account purchased 52,250 shares, and sold 98,770 shares between November 29, 2017 and December 27, 2017. 6 According to FINRA, the Scottrade account statements gathered by FINRA also show that this account purchased 24,000 shares, and sold 51,750 shares between Pecember 4, 2017 and December 27, 2017. 5 10 I l f t Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.51 Page 51 of 55 1 37. . According to communications found in the LTEA Plain View Materials, on 2 December 21, 2017, between 6:28 A.M. and 6:29 A.M., w·atson and defendant Lindsay 3 4 5 6 exchanged the following text messages: . Lindsay: Laughing ... Good job getting that done deal we may have a $50 stock 11 pull well on TMS ... are we going to continue with marketing for LTT' Based on my 12 knowledge of this investigation, I believe that LT refers to LTEA, and TMS refers to 13 TheMoneyStreet.com. 15 39. On the morning of December 21, 2017, the accounts of Giguiere and his wife sold the same volume of LTEA shares they had acquired the day before, i.e., before the 16 Blockchain Press Release was disseminated. More specifically, the brokerage account 17 documents obtained by FINRA show that: 18 a. 19 22 price of $7 .20 per share. b. At qr about 10:09 A.M., the Lindsay Giguiere Brokerage Account sold 17.,500 shares of LTEA for approximately $121,726, at ap. average 23 price of$6.96 per share. 24 25 Between 10:08 and 10: 11 A.M., Gannon Giguiere Brokerage Account sold 17,500shares ofLTEA for approximately $125,925, at an average 20 21 I ! I Watson: Thanks. Afucking lot of brain damage. When the market sees the Stater 3 8. At 7: 16 A.M. on December 21, 2017, Giguiere sent text messages to Lindsay 9 1o and CHS stating ''Nice pop in LT ... Amazing the hype around crypto ... The story will 14 I Watson: Smiling? 7 8 l c. Cumulatively1 the LTEA transactions in the Gannon Giguiere 26 Brokerage Account and the Lindsay Giguiere Brokerage Account on 27 December 20 and 21, 2017, produced proceeds of approximately 28 $247,651, and generated gross profits of over·$162-,000. 11 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.52 Page 52 of 55 1 40. According to a Form 10-K submitted by LTEA to the SEC on April 13, 2018, 2 the company had been delisted from the Nasdaq Capital Market in February 2018. 3 4 5 6 7 8 Specifically, the Form 10-K stated: "[O]n February 15, 2018, we received a notice from NASDAQ stating that NASDAQ had determined to delist our securities under the discretionary authority granted to NASDAQ pursuant to NASDAQ Rule 5101. The notification letter stated that NASDAQ believed that we made a series of public statements designed to mislead investors and to take advantage of public interest in bitcoin and Blockchain technology, thereby raising concerns about our suitability for exchange 9 10 listing." I know from my training and experience that when NASDAQ delists a security, 11 it may not trade on or through the NASDAQ Capital Market unless the associated 12 company takes steps to relist the security. CONCLUSION 13 14 41. Based on the foregoing, there is probable cause to believe that Giguiere and 15 Lindsay conspired to and did trade LTEA securities on the basis of material, non-public 16 information, in violation of 18 U.S.C._ § 371, 15 U.S.C. §§ 78j(b), 78(ff), and Title 17 17 C.F.R., § 240.lOb-5. Further there is probable cause to believe that the items to be seized 18 in AttachmentB will be found on the Subject Telephone as described in Attachment A. 19 20 21 22 23 24 25 26 27 28 Subscribed and sworn to before me on March _h_, 2019 ·~ALOPEZ United States Magistrate Judge 12 Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.53 Page 53 of 55 ATTACHMENT A PROPERTY TO BE SEARCHED One iPhone 6, white in black case; currently in the possession of the Federal Bureau of Investigation, 10385 Vista Sorrento Parkway, San Diego, CA 92121 (the "Subject Telephone"). Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.54 Page 54 of 55 ATTACHMENT B ITEMS TO BE SEIZED Authorization to search the SUBJECT TELEPHONE described in Attachment A includes the search of disks, memory cards, deleted data, remnant data, slack space, and temporary or permanent files contained on or in the SUBJECT TELEPHONE. The seizure · ·and search of the SUBJECT TELEPHONE will be conducted in accordance with the affidavit submitted in support-of the warrant. The evidence to be seized from the SUBJECT TELEPHONE will be electronic records, communications, and data such as emails, text messages, messages from text messaging applications like WhatsApp, messages and posts from social networking sites like Facebook, photographs, audio files, videos, and location data, for the period of November 1, 2017 to July 5, 2018: a. Tending to identify attempts to trade the stock of Long Island Iced Tea Corp., its predecessors, successors and affiliates (collectively, "LTEA"), on the basis of material, non-public information, including attempts to: 1. Obtain material, non-public information regarding LTEA. 2. Pass on to others material, non-public information regarding LIBA. 3. Determine others who had, or did not have, access to material, nonpublic information regarding LTEA. 4. Detennine the likely impact any material, non-public information . regarding LTEA might have on the price or trade volume of LTEA stock. 5. Promote the stock of LTEA including through call rooms, newsletters, or websites, induding but not limited to, www.TheMoneyStreet.com. 6. Identify payments, and the routing of payments, for the promotion of the stock of LTEA. 7. Buy or sell the stock ofLTEA. .8. Distribute proceeds from the sale of the stock ofLTEA. I I I !i i j l I .. , Case 3:19-mj-01985-MSB Document 1 Filed 05/14/19 PageID.55 Page 55 of 55 b. Tending to identify accounts, profiles, facilities, storage devices, and/or services-such as email addresses, IP addresses, and phone numbers-used to facilitate the trading of LTEA stock based on material, non-public information. c. Tending to identify payment, payment methods, or other monetary transactions relating to the trading of LTEA stock based on material, nonpublic information. ' d. Tending to identify co-conspirators, criminal ~ssociates, or others involved in the promotion or trading of L TEA stock based on material, non-public information. e. Tending to identify travel to or presence at locations involved in the trading of LIBA stock based on material, non-public information. g. Tending to place in context, identify the creator or recipient of, or establish the time of creatio~ or receipt of communications, records, or data involved in the activities described above. h. Provide context to any of the communications, records, or data described above, such as electronic mail sent or received in temporal proximity to any relevant electronic mail. which are evldence of a conspiracy to commit securities fraud in violation of 1~ U.S.C. § 371, and securities fraud ·in violation of 15 U.S.C. § §·78j(b), 78ff, and 17 C.F.R. § 240 .1 Ob-5. The seizure and search of the cellular phone(s) shall follow the procedures outlined in the Exhibit A.